Wall Street’s new wave of “where to invest” forecasts has arrived, and the hopeful premise remains the same: experts can predict how financial markets will perform in the coming year. History suggests investors should heed caution.
Consider Kiplinger’s “Top 10 Stock Picks for 2025,” curated based on an “exceptional” record of stock-picking success. Unfortunately for Kiplinger’s readers, their top picks returned just 7.5%, a rather mundane result relative to the 22.9% return of the global stock market.
Barron’s annual roundtable highlighted the forecasts of a distinguished panel of Wall Street experts. One panelist claimed he was “as negative about the S&P 500” as he’d been in “a long time.” Another said he expected the index to fall by nearly 20%. Had the year ended after April’s sweeping tariffs, Barron’s experts might have been right. Instead, the S&P 500 surged nearly 40% from those lows, finishing the year up almost 18%.
Annual price targets for the S&P 500 Index are another prediction tradition of which to be wary. After markets plunged in April, most Wall Street firms quickly lowered their targets (see chart below). JPMorgan cut its outlook from an expected 11% gain to a 12% decline, warning that “there will be blood.” Among the many strategists who followed suit, not one forecasted returns above 5%. But markets quickly recovered, setting multiple new all-time highs. As the S&P 500 approached its 16% price return for the year (which excludes dividends), strategists predictably revised their forecasts higher.
Time and again, predictions fail to provide reliable guidance and instead offer little more than entertainment. As last year’s predictions illustrate, investors should prioritize proven investment principles—such as diversification, discipline, and rebalancing—over chasing the latest forecast.
Forecasts vs. reality
Wall Street lowers S&P 500 year-end targets during tariff turmoil
Source: Bloomberg, Wall Street Journal, CNBC, and respective firm market outlooks. Analyst forecasts and 2025 returns are shown as price returns. Price return reflects changes in index value and excludes dividends and other income. Indices are unmanaged and not available for direct investment; therefore, index performance does not reflect the expenses associated with managing an actual portfolio. Past performance is no guarantee for future results.
